Morgan Stanley conference€¦ · 24/03/2015 · This presentation contains statements that constitute “forward-looking statements,” including but not limited to ... or arising

Morgan Stanley conferenceTom NaratilGroup Chief Financial Officer and Group Chief Operating Officer

March 24, 2015

Cautionary statement regarding forward-looking statementsThis presentation contains statements that constitute “forward-looking statements,” including but not limited to management’s outlook for UBS’s financial performance and statements relating to the anticipated effect of transactions and strategic initiatives on UBS’s business and future development. While these forward-looking statements represent UBS’s judgments and expectations concerning the matters described, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from UBS’s expectations. These factors include, but are not limited to: (i) the degree to which UBS is successful in executing its announced strategic plans, including its cost reduction and efficiency initiatives and its planned further reduction in its Basel III risk-weighted assets (RWA) and leverage ratio denominator (LRD); (ii) developments in the markets in which UBS operates or to which it is exposed, including movements in securities prices or liquidity, credit spreads, currency exchange rates and interest rates and the effect of economic conditions and market developments on the financial position or creditworthiness of UBS’s clients and counterparties; (iii) changes in the availability of capital and funding, including any changes in UBS’s credit spreads and ratings, or arising from requirements for bail-in debt or loss-absorbing capital; (iv) changes in or the implementation of financial legislation and regulation in Switzerland, the US, the UK and other financial centers that may impose more stringent capital (including leverage ratio), liquidity and funding requirements, incremental tax requirements, additional levies, limitations on permitted activities, constraints on remuneration or other measures; (v) uncertainty as to when and to what degree the Swiss Financial Market Supervisory Authority (FINMA) will approve reductions to the incremental RWA resulting from the supplemental operational risk capital analysis mutually agreed to by UBS and FINMA, or will approve a limited reduction of capital requirements due to measures to reduce resolvability risk; (vi) the degree to which UBS is successful in executing the announced creation of a new Swiss banking subsidiary and a US intermediate holding company, the squeeze-out to complete the establishment of a holding company for the UBS Group, changes in the operating model of UBS Limited and other changes which UBS may make in its legal entity structure and operating model, including the possible consequences of such changes, and the potential need to make other changes to the legal structure or booking model of UBS Group in response to legal and regulatory requirements, including capital requirements, resolvability requirements and proposals in Switzerland and other countries for mandatory structural reform of banks; (vii) changes in UBS’s competitive position, including whether differences in regulatory capital and other requirements among the major financial centers will adversely affect UBS’s ability to compete in certain lines of business; (viii) the liability to which UBS may be exposed, or possible constraints or sanctions that regulatory authorities might impose on UBS, due to litigation, contractual claims and regulatory investigations; (ix) the effects on UBS’s cross-border banking business of tax or regulatory developments and of possible changes in UBS’s policies and practices relating to this business; (x) UBS’s ability to retain and attract the employees necessary to generate revenues and to manage, support and control its businesses, which may be affected by competitive factors including differences in compensation practices; (xi) changes in accounting or tax standards or policies, and determinations or interpretations affecting the recognition of gain or loss, the valuation of goodwill, the recognition of deferred tax assets and other matters; (xii) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (xiii) whether UBS will be successful in keeping pace with competitors in updating its technology, particularly in trading businesses; (xiv) the occurrence of operational failures, such as fraud, unauthorized trading and systems failures; and (xv) the effect that these or other factors or unanticipated events may have on our reputation and the additional consequences that this may have on our business and performance. The sequence in which the factors above are presented is not indicative of their likelihood of occurrence or the potential magnitude of their consequences. Our business and financial performance could be affected by other factors identified in our past and future filings and reports, including those filed with the SEC. More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC, including UBS’s Annual Report on Form 20-F for the year ended 31 December 2014. UBS is not under any obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.

Disclaimer: This presentation and the information contained herein are provided solely for information purposes, and are not to be construed as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. No investment decision relating to securities of or relating to UBS Group AG, or UBS AG, or its affiliates should be made on the basis of this document. Refer to UBS's fourth quarter 2014 report and its Annual report on Form 20-F for the year ended 31 December 2014. No representation or warranty is made or implied concerning, and UBS assumes no responsibility for, the accuracy, completeness, reliability or comparability of the information contained herein relating to third parties, which is based solely on publicly available information. UBS undertakes no obligation to update the information contained herein.

© UBS 2015. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.

1

2015 and beyond: unlocking UBS's full potential

2

2011

Unlock full potential

• Capital strength

• Operational efficiency

• Profitable growth

• Improving returns on capital

• Attractive returns to shareholders

Implement and execute

• Wealth management businesses at the core of our strategy

• Strategic commitment to be the leading Swiss universal bank

• Transform the Investment Bank

• Reduce balance sheet

• Build capital strength

• Reduce operational risks and strengthen controls

• Implement long-term efficiency and productivity measures

2013 20142012 2015 and beyond

Continuing to execute a clear and consistent strategy

20%

36%19%

24%

46%

21%

27%

7%

4.3 4.44.6 4.5

4.7 4.74.9

5.14.9 4.9 5.0 5.0

5.3 5.3

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

Business mix predominantly higher growth and lower capital intensity businesses

Capital efficient growth in our highly cash-flow generative businesses

Quarterly operating income CHF billion, adjusted

WM, WMA, R&C and Global AM

Refer to slide 23 for details about adjusted numbers, Basel III numbers and FX rates in this presentation1 Adjusted, IB also adjusted for the 3Q14 provision for litigation, regulatory, and similar matters of CHF 1,687 million; 2 Reported, excluding items managed globally, approximately CHF (2.2) billion, including the aforementioned provision for litigation, regulatory and similar matters

3

PBT contribution%, 2014 PBT

By business division1

By region2

Americas Switzerland Asia PacificEMEA excl. Switzerland

~80%

Expected future contribution from non-IB businesses

~20%

Expected future contribution from the IB

WM + WMA IB Global AMR&C

UBS is best positioned to seize the global wealth management opportunity

North America1,2

estimated market growthCAGR 2012-2017

Emerging markets1,2,4


Europe including Switzerland1,3


APAC1


~2%

~3%

~8%

~8%

1 BCG World Wealth Report 2013; incl. retail households; 2013 growth based on growth forecast; 2 WMA's Latin America business is included in the North America invested assets, not in emerging markets; 3 Includes Western Europe and all other countries not covered elsewhere, beneficiary owner domicile view, invested assets are the sum of the invested assets usually reported in Europe and Switzerland; 4 Middle East & Africa, Latin America and Eastern Europe; 5 UHNW invested assets overlap with the regional split

• Fundamentally attractive industry economics

• Compelling growth prospects

⁻ UHNW ~8%1

⁻ HNW ~6%1

• Still highly fragmented industry

Our footprint is unique with a strong presence in growth markets

UHNW globally1,5


~8%

1,027

540

168

269

497

UBS invested assets31.12.14

CHF billion

4

UBS is the world's leading wealth manager

5

Refer to slide 23 for details about adjusted numbers, Basel III numbers and FX rates in this presentation1 Scorpio Partnership Private Banking Benchmark; 2 Refer to page 98 of the 2014 Annual report (Wealth Management and Wealth Management Americas)

Invested assets of CHF 2 trillion managed by over 11,000 advisors globally

• USD 1 trillion invested assets USD 1 billion adjusted pre-tax profitUSD 1 million in revenue per FA

• Well positioned to capture growth opportunities; continued progress in banking initiatives

Wealth Management Americas2014

Wealth Management2014

• CHF 1.0 trillion invested assetsCHF 2.4 billion adjusted pre-tax profit CHF 1.9 million in revenue per CA

• Leading position in Europe, APAC, Emerging Markets, Switzerland and UHNW segment by invested assets1

1.0

0.70.6

1.0

Regional PBT2

reported, 2014

AmericasEMEA excl.Switzerland

SwitzerlandAsia Pacific

Our wealth management franchise is unrivaled

Invested assetsCHF trillion

Operating incomeadjusted, CHF billion

WM

WMA

2012

12.9

5.9

7.0

2014

14.9

7.0

7.9

2013

14.1

6.5

7.6

+7% CAGR +12% CAGR

0.8

1.6

2.0

2012

0.9

1.8

1.0

0.9 1.0

20142013

0.8

6

Continued success in our world leading wealth management franchise

Profit before taxadjusted, CHF billion

2013

2.5

0.9

2014

3.53.3

0.9

2.4

2012

2.7

0.6

2.1

+14% CAGR

Refer to slide 23 for details about adjusted numbers, Basel III numbers and FX rates in this presentation

Superior growth prospects, a strong track record and a unique global footprint

7

WMA

WM

31.12.14

2.0

1.0

1.0

31.12.09

1.5

0.7

0.8

Growth in target segments

Increased asset baseCHF trillion

Improving recurring revenues

MandatesMandate assets2 as % of invested assets

Strong growth in target segmentsInvested assets by client wealth segment1, 31.12.14 Invested assets growth, 31.12.09 to 31.12.14

LendingGross loans, CHF billion

>10m

1-10m

0.25-1m

<0.25m

+33%

22%21%20%

24%

32%29%

28%

34%

WM WMA

9787

75

113

35312844

20122011 20142013

Successfully targeting the fastest growing wealth segments and high quality revenues

Delivering on our strategic initiatives

>50 m

WM

WMA

+68%

+107%

+58%

+3%

(25%)

Refer to slide 23 for details about adjusted numbers, Basel III numbers and FX rates in this presentation1 Client invested assets with UBS; 2 Mandates (Wealth Management) and Managed accounts (Wealth Management Americas)

443

403

455

135

39

CHF million, billion

USD million, billion

Delivering results in a variety of market conditions

Source: Bloomberg (23.3.15) 8

Foreign exchange rates CHF per currency; dotted lines: average since 15.1.15

Interest rates 6-month Libor

Commodities generic crude oil contract in USD; dotted line: average since 3.1.11

GBP1.48

EUR1.07USD1.01

43.5

113.9

Our consistent strategy and long term initiatives allow us to succeed in a variety of market conditions

3.1.11 20.3.15

CHF(0.72)

EUR0.10

USD0.41

3.1.11 20.3.15

3.1.11 20.3.15

92.791.6

CHF0.24

EUR1.22USD0.46

GBP1.45EUR1.25

USD0.93

Driving effectiveness and efficiency: Costs

0.2

Cost reductions by division net cost savings target in CHF billion1

IB: 0.3-0.4

WM: 0.2-0.3

WMA: 0.1-0.2

R&C: 0.1-0.2

Global AM: ~0.1

All

oca

tio

n t

ob

usi

ne

ss d

ivis

ion

s

Targeting CHF 2.1 billion in cost savings; CHF 1.1bn remaining in Corporate Centre in 2015

1 Measured by year-end exit rate versus FY13 adjusted operating expenses, net of changes in charges for provisions for litigation, regulatory and similar matters, FX movements, and changes in regulatory demand of temporary nature; 2 Including additional costs-to-achieve (CtA; additional temporary costs that are necessary to effect our cost reduction program but not classified as restructuring charges) of CHF ~0.1 billion in each year 9

0.7

Total 2.1

Savingstarget by year-end

2015

Additional future

savings as Non-core and

Legacy Portfolio is run down

Non-Core and Legacy Portfoliosavings still to come

Corporate Centre Coresavings still to come

• Net cost reduction target in the Corporate Center to drive maximum cost efficiency in services delivered to businesses

• Business divisions manage to cost/income target ranges, with direct costs, demand for services from Corporate Center, and front-office efficiency being the key levers to manage

• Restructuring cost guidance2 over the next 3 years:

⁻ CHF ~1.5 billion in 2015



• CHF ~0.3 billion of net cost reductions achieved in FY14 versus FY13, of which CHF ~0.1 billion in Corporate Center –Core Functions and CHF ~0.2 billion in Non-core andLegacy Portfolio

• IT infrastructure and simplification investment will account for ~50% of total restructuring costs and additional CtA in 2015-2017

⁻ ~30% will be on infrastructure modernisation

⁻ The remainder on business process and application simplification and our IT operating model0.1

0.2

Non-Core and Legacy Portfoliosavings achieved in 2014

Corporate Centre Coresavings achieved in 2014

1.0

1.4

0.9

Investments in digital platforms support business growth

10

UBS Switzerland1 Wealth Management

Investment Bank Global AM

Lower attrition rate for e-banking clients, especially in higher wealth segments

Excellent client feedback: continued 5-star Apple App store ratings, award recognition, positive press coverage

Investor Profile

CIO Whiteboard

UBS Newsstand

CIO Monthly (House View)

E-banking, mobile banking, Interactive Advisor

SAA/TAA4

implementationInvestment opportunity and suitability tools

Advisory process tools

• UBS Neo unifies legacy 94 client touch-points into single platform

• 6 Platform of the Year awards in 5 quarters; strong client validation

• 5-year investment yielded ~30% cost reduction in IB client facing IT spend

• Neo framework has enabled faster time-to-market for new business propositions, i.e. Neo Fixed Income agency model

Launch of UBS Funds App

Provides direct access to comprehensive information about UBS investment funds for investors in 5 countries (Switzerland, Germany, France, Austria and Luxembourg)

1 2014, for Swiss private clients (retail and WM Switzerland's high net worth clients) active in both December 2013 and December 2014, excluding rental deposits and single-purpose accounts (e.g. mono-saver or mortgages only); 2 Return on business volume; 3 Net new business volume 4 Strategic Asset Allocation / Tactical Asset Allocation

4.2x

Income perclient account

RoBV2 NNBV3 growth rate per client account

Without e-banking With e-banking only With e- and mobile banking

Wealth Management Americas

• Client Mobile Application: Provides account summary, holdings, balances, transaction history, funds transfer, internal bill pay and one-touch contact to FA.⁻ Pilot launched Dec 2014 with full rollout end of

1Q15/early 2Q15.⁻ Mobile deposit capture for checks and bill pay to

be introduced in 2H15. • e-Signature: Enables clients to securely view, sign and

return forms to UBS electronically.⁻ Implementation reduces costs, error rates, and

forms processing times, while increasing efficiencies and client satisfaction.

⁻ Pilot began February 2015 with Wealth Advice Center; full rollout scheduled for mid-2015. Pilot showing high adoption rate, significant improved processing times, and very positive feedback from pilot users and clients.

⁻ UBS received Breakthrough Award at the DocuSign Momentum 2015 conference (based on speed of implementation).

Fully applied Swiss SRB Basel III capital and ratios

Refer to slide 23 for details about adjusted numbers, Basel III numbers and FX rates in this presentation1 FX translation effect only, i.e., excludes impact of e.g., PRV/NRV movements from derivatives and OCI impact of CHF ~0.7 billion from defined pension obligation due to lower interest rates, estimate based on balances reported as of 31.12.14 and FX spot rates as of 28.2.15 (EUR/CHF of 1.07, USD/CHF of 0.95, GBP/CHF of 1.47); 2 We expect any such issue to be classified as a liability for accounting purposes

11

• Pro forma figures include FX translation impact only for February 2015 exchange rates (no secondary effects)

• Pro forma including AT1 issuance in February 2015 of CHF ~3.4 billion would have contributed ~160 bps to the fully applied year-end 2014 total capital ratio

• We intend to build ~CHF 2.5 billion in employee AT1 Deferred Contingent Capital Plan (DCCP) capital over the next five years

• We will continue to issue loss-absorbing AT1 capital from UBS Group AG2

Ratio

T2 Low-trigger

T2 High-trigger

AT1 High-trigger

CET113.4%

0.2%

0.4%

4.8%Loss-absorbing capital in the form of AT1 or T2

CET113.5%

5.5%

1 1

Loss-absorbing capital in the form of AT1 or T2

CET113.5%

7.1%

9.8%12.8% 13.4% 13.5% 13.5%

11.4%

15.4%

18.9% 19.0%20.6%

31.12.12 31.12.13 31.12.14 31.12.14pro forma

31.12.14pro formaincludingFebruary2015 AT1issuance

Fully applied Swiss SRB leverage ratio

12

Refer to slide 23 for details about adjusted numbers, Basel III numbers and FX rates in this presentation1 FX translation effect only, i.e., excludes impact of e.g., PRV/NRV movements from derivatives and OCI impact of CHF ~0.7 billion from defined pension obligation due to lower interest rates, estimate based on balances reported as of 31.12.14 and FX spot rates as of 28.2.15 (EUR/CHF of 1.07, USD/CHF of 0.95, GBP/CHF of 1.47); 2 February 2015 AT1 issuance: +34 bps (EUR/CHF of 1.07, USD/CHF of 0.94), AT1 DCCP issuance of CHF 2 billion to attain target of CHF 2.5 billion: +20 bps, T2 DCCP redemption over next 3-4 years: (9) bps

Ratio

T2 Low-trigger

T2 High-trigger

AT1 High-trigger

CET12.9%

0.05%

0.1%

1.0%


CET13.0%

1.6%

1 1


CET13.0%

1.2%


• Pro forma including AT1 issuance in February 2015 of CHF ~3.4 billion would have contributed ~35 bps to the fully applied year-end 2014 Swiss SRB leverage ratio

• Based on 2014 year-end CHF 998 billion LRD, our fully applied Swiss SRB leverage ratio would increase by ~45 bps2

assuming:⁻ February 2015 AT1 issuance of CHF ~3.4 billion⁻ AT1 DCCP issuance of CHF 2 billion to attain target of CHF 2.5 billion over five years (and T2 DCCP redemption

over next 3-4 years)

• This would imply an increase of ~54 bps in year-end 2014 reported T1 leverage ratio

1

Including February 2015 AT1 issuance

2.8% 2.9% 3.0% 3.0%

~2.4%

3.4%

4.1% 4.2%4.6%

3.4%

31.12.12 31.12.13 31.12.14 31.12.14pro forma

31.12.14pro forma

31.12.14pro forma

BIS T1 ratio

11.7% 11.1% 10.3%12.4%

11.1% 10.5% 10.1% 9.6%

1.2%0.5%

1.1%

1.6%

1.5%0.9% 1.3%

1.0%

3.1%

1.2%

3.9%

2.4%

2.2%

1.3% 1.3% 2.7%

16.0%

12.8%

15.4%16.4%

14.8%

12.7% 12.7%13.3%

Capital strength is the foundation of our success

Refer to slide 23 for details about adjusted numbers, Basel III numbers and FX rates in this presentation1 Basel III CET1 capital ratios (fully applied) as per CRD IV; 2 Capital ratios as of 31.12.14; 3 Basel III fully applied CET1 capital ratios under advanced approach 13

IHGFEDCBA

18.9%

UBS 31.12.14

13.4%

0.7%

4.8%

Basel III fully applied capital – large global banksBased on latest available disclosure2

Common equity tier 1 capitalHigh-trigger loss absorbing capitalLow-trigger loss absorbing capital

European1,2 US2,3

13.4%

18.9%

Tier 1 capitalTier 2 capital

Common equity tier 1 capital

0.4%

13.5%

Swiss SRB Basel III fully applied capital 31.12.14

We have the highest Basel III fully applied CET1 capital ratio among large global banks

16.5%

10.2%

3.0%

3.3%

Delivering attractive returns to our shareholders

Refer to slide 23 for details about adjusted numbers, Basel III numbers and FX rates in this presentation1 Expected dates for 2014 ordinary dividend: 11.5.15 (ex date), 12.5.15 (record date) and 13.5.15 (payment date); 2 One-time supplementary capital return expected to be paid out after the completion of the squeeze-out process, expected 2H15; 3 Payout ratio of at least 50% conditional on both fully applied CET1 ratio of minimum 13% and fully applied CET1 ratio of minimum 10% post-stress; 3 Ordinary dividend per share as a % of diluted earnings per share; 4 The timing and success of the SESTA procedure are dependent on the court, please refer to page 19 of the 2014 Annual Report

Proposed ordinary dividend and accrued one-time supplementary capital return in 2014

• The ordinary dividend1 and the one-time supplementary capital return2 will be paid out of capital contribution reserves

• Ordinary dividend and one-time supplementary capital return will have different record and payment dates

• UBS Group AG has filed a request for a SESTA squeeze-out procedure of UBS AG shares, and successful completion is expected in 2H154

CET1 ratiofully applied

12.8%~6.7% ~9.8% 13.4%

Payout ratio

30%9% N/M 55%(ordinary dividend)3

0.50

0.250.15

0.10

Total capital return per shareCHF per share

14

We are committed to a total payout ratio of at least 50% of net profit attributable to UBS Group AG shareholders3

20142011 2012 2013

One-time supplementary capital return following squeeze-out

One-time supplementary capital return

Ordinary dividend

0.25

+

Financialyear

UBS – a unique and attractive investment proposition

15

Attractive capital returns policy

The world's leadingwealth manager

UBS is the world's largest wealth manager1

• Unique global footprint provides exposure to both the world's largest and fastest growing global wealth pools

• Leading position across the attractive HNW and UHNW client segments

• Profitable in all key regions including Europe, US , APAC and Latin America

• Significant benefits from scale; high and rising barriers to entry

• Retail & Corporate, Global Asset Management and the Investment Bank all add to our wealth management franchise, providing a unique proposition for clients

• Highly cash generative with a very attractive risk-return profile

• 10-15% pre-tax profit growth target for our combined wealth management businesses

Strong capital position

UBS capital position is strong – and we can adapt to change

• Our Basel III CET1 capital ratio is the highest among large global banks and we already met our expected 2019 Swiss SRB Basel III capital ratio requirements

• Our highly capital accretive business model allows us to adapt flexibly to changes in regulatory capital requirements

UBS is committed to an attractive capital returns policy

• Our earnings capacity, capital efficiency and low-risk profile all support our objective to deliver sustainable and growing capital returns to our shareholders

• Our capital returns capacity is strengthened by our commitment to further improve efficiency and our potential for net upward revaluations of deferred tax assets

• We target to pay out at least 50% of our net profits2, while maintaining our strong capital position and profitably growing our businesses

1 Scorpio Partnership Global Private Banking Benchmark 2014; 2 Payout ratio of at least 50% conditional on both fully applied CET1 ratio of minimum 13% and fully applied CET1 ratio of minimum 10% post-stress

Appendix

Capital – foreign currency translation effect

17

Pro-forma foreign currency translation effect on Group capital metrics1

1 FX translation effect only, i.e., excludes impact of e.g., PRV/NRV movements from derivatives and OCI impact of CHF ~0.7 billion from defined pension obligation due to lower interest rates; 2 Estimate based on balances reported as of 31.12.14 and FX spot rates as of 28.2.15 (EUR/CHF of 1.07, USD/CHF of 0.95, GBP/CHF of 1.47); 3 Operational risk RWA 35% and other 18%; 4 Excluding PRV/NRV and cash collateral receivable/payables on derivatives; 5 Total liabilities (excluding equity)

Swiss SRB LRD (fully applied)CHF billion

Basel III CET1 capital (fully applied)CHF billion

4.1%

Pro-forma

~4.2%

Reported

13.4%

Pro-forma

~13.6%

Reported

Ratio

31.12.14 reportedand pro-forma basedon FX spot ratesas of 28.2.152

RWABasel III

CET1 capitalSwiss SRB

LRDSwiss SRB

total capital

Currency distribution% of total, as of 31.12.14

IFRS equity

10%

14%

45%

23%

7%

7%

9%

27%

54%3

4%

4%

3%

38%

53%

3%

CHF

USD

EUR

Other

Ratio

31.12.14 reportedand pro-forma basedon FX spot ratesas of 28.2.152

IFRS equity (1.2)50.7 49.5

67%

3%

3%

23%

4%

2%

8%

37%

50%

3%

Total assets4

10%

12%

42%

27%

8%

Total liabilities4,5

16%

9%

44%

26%

6%GBP

Swiss SRB total capital (0.8)40.8 40.0(0.5)Basel III CET1 capital 28.9 28.5

LRD (45.1)997.9 952.8(5.8)RWA 216.5 210.7

~13.5%

Updated performance targets from 1Q15

18

Our strategy is durable and we are growing our core businesses profitably

Durable strategy

Our strategy and performance targets have served us well in many environments

Our capital position is stronger than our peers, which gives us unique opportunities in the current challenging markets

FX volatility is likely to remain and visibility is less certain

Profitable core business growth

Despite the current environment, UBS's globally diversified business operations and significant scale create opportunity

Our existing programs on pricing, increased collaboration and structural cost reductions should enable us to take market share and profitably grow our core businesses

1 Targets, KPIs and guidance not included in the table remain unchanged as per most recent disclosure; 2 Refer to slide 19 for a complete list of performance targets; 3 Return on tangible equity

Changes to Group targets, KPIs and guidance1,2

Group

Target:

• 2015: adjusted RoTE3 around 10%

• From 2016: adjusted RoTE above 15%

Wealth Management

Wealth Management Americas

Target: 10-15% adjusted pre-tax profit growth for combined businesses through the cycle (previously aspiration)

KPI: adjusted net margin (new) and gross margin (previously target)

KPI: adjusted net margin (new) and gross margin (previously target)

Global Asset Management

Guidance: we expect the net interest margin to trend towards the lower end of the target range of 140-180 bps, should interest rates remain at the current level

Retail & Corporate

Core Functions Net cost reduction CHF 1.0 billion by year-end 20152

Non-core and Legacy Portfolio

Net cost reduction

Basel III RWA (fully applied)

CHF 0.4 billion by year-end 20153, additional CHF 0.7 billion4 after 2015

~CHF 40 billion by 31.12.15, ~CHF 25 billion by 31.12.17

Group and business division targets – from 1Q15

19

Ranges for sustainable performance over the cycle

Business divisions

Corporate Center

Retail & CorporateNet new business volume growth rateNet interest marginAdjusted cost/income ratio

1-4% (retail business)140-180 bps50-60%

Global AssetManagement

Net new money growth rateAdjusted cost/income ratioAdjusted annual pre-tax profit

3-5% excluding money market60-70%CHF 1 billion in the medium term

Investment Bank

Adjusted annual pre-tax RoAE1

Adjusted cost/income ratioBasel III RWA limit (fully applied)Funded assets limit

>15%70-80%CHF 70 billionCHF 200 billion

Refer to slide 23 for details about adjusted numbers, Basel III numbers and FX rates in this presentation 1 Adjusted annual pre-tax return on attributed equity; 2 Measured by 2015 year-end exit rate versus FY13 adjusted operating expenses net of FX movements, changes in regulatory demand of temporary nature and changes in charges for provisions for litigation, regulatory and similar matters; 3 Measured by 2015 year-end exit rate versus FY13 adjusted operating expenses net of changes in charges for provisions for litigation, regulatory and similar matters; 4 Reduction in annual adjusted operating expenses versus FY13; 5 Based on the rules applicable as of the announcement of the target (6.5.14)

Wealth ManagementAmericas

Net new money growth rateAdjusted cost/income ratio

2-4%75-85%

Wealth ManagementNet new money growth rateAdjusted cost/income ratio

3-5%55-65%

10-15% annual adjusted pre-tax profit growth for combined businesses through the cycle

Group

Group

Adjusted cost/income ratioAdjusted return on tangible equity

Basel III CET1 ratio (fully applied)

Basel III RWA (fully applied)

Swiss SRB LRD

60-70%around 10% in 2015, >15% from 2016

13% (10% post-stress)

<CHF 215 billion by 31.12.15, <CHF 200 billion by 31.12.17

CHF 900 billion5

Fully applied Swiss SRB Basel III capital and ratios

Refer to slide 23 for details about adjusted numbers, Basel III numbers and FX rates in this presentation1 FX translation effect only, i.e., excludes impact of e.g., PRV/NRV movements from derivatives and OCI impact of CHF ~0.7 billion from defined pension obligation due to lower interest rates, estimate based on balances reported as of 31.12.14 and FX spot rates as of 28.2.15 (EUR/CHF of 1.07, USD/CHF of 0.95, GBP/CHF of 1.47); 2 Loss-absorbing capital in the form of AT1 or T2; 3 DCCP capital; 4 We expect any such issue to be classified as a liability for accounting purposes

20


• Pro forma including AT1 issuance in February 2015 of CHF ~3.4 billion would have contributed ~160 bps to the fully applied year-end ratio

Ratio

T2

T2 Low-trigger

T2 High-trigger

AT1 High-trigger

CET1

CET1

Total capital

RWA

25.2

29.3

258

28.9

34.6

225

28.9

40.8

216

AT1Low-trigger

High-trigger3 0.5

13.4%

Low-trigger 3.7 4.7 10.5

CHF billion

High-trigger3 0.5 1.0 0.9

0.2%

0.4%

4.8%

-

Other2 11.6

28.5


CET113.5%

5.5%

40.0

211

1 1


CET113.5%

7.1%

15.0

28.5

43.4

211

9.8%12.8% 13.4% 13.5% 13.5%

11.4%

15.4%

18.9% 19.0%20.6%

31.12.12 31.12.13 31.12.14 31.12.14pro forma

31.12.14pro formaincludingFebruary2015 AT1issuance

Fully applied Swiss SRB leverage ratio

21

Refer to slide 23 for details about adjusted numbers, Basel III numbers and FX rates in this presentation1 FX translation effect only, i.e., excludes impact of e.g., PRV/NRV movements from derivatives and OCI impact of CHF ~0.7 billion from defined pension obligation due to lower interest rates, estimate based on balances reported as of 31.12.14 and FX spot rates as of 28.2.15 (EUR/CHF of 1.07, USD/CHF of 0.95, GBP/CHF of 1.47); 2 Loss-absorbing capital in the form of AT1 or T2; 3 DCCP capital

Ratio

T2

T2 Low-trigger

T2 High-trigger

AT1 High-trigger

CET1

CET1

Total capital

LRD

25.2

29.3

28.9

34.6

1,015

28.9

40.8

998

AT1Low-trigger

High-trigger3 0.5

2.9%

Low-trigger 3.7 4.7 10.5

CHF billion

High-trigger3 0.5 1.0 0.9

0.05%

0.1%

1.0%

-

Other2 15.0

28.5


CET13.0%

1.6%

43.4

953

• Pro forma figures include FX translation impact only for February 2015 exchange rates (no secondary effects)• Pro forma including AT1 issuance in February 2015 of CHF ~3.4 billion would have contributed ~35 bps to the fully applied

year-end ratio

1 1


CET13.0%

1.2%

11.6

28.5

40.0

953

2.8% 2.9% 3.0% 3.0%

~2.4%

3.4%

4.1% 4.2%4.6%

31.12.12 31.12.13 31.12.14 31.12.14pro forma

31.12.14pro formaincluding February 2015 AT1 issuance

Phase-in Swiss SRB Basel III ratios

Refer to slide 23 for details about adjusted numbers, Basel III numbers and FX rates in this presentation1 Pro-forma; 2 Phase-out capital and other tier 2 capital; 3 DCCP, AT1 DCCP capital issuance in 4Q14 was offset by required deductions in goodwill under Swiss SRB Basel III framework (phase-in); 4 We expect any such issue to be classified as a liability for accounting purposes 22

Ratio

T2

CET1

Total capital

RWA

AT1Low-trigger

High-trigger

Low-trigger

CHF billion

Capital ratios

Other2

High-trigger3

LRD

Leverage ratios

T2 Low-trigger

T2 High-trigger(DCCP)

T2 Other

CET1

40.0

49.6

262

42.2

50.8

229

43.0

56.3

221

5.4 3.0 2.1

15.3%18.5% 19.4%

31.12.14

22.2%

31.12.121

18.9%

25.5%

31.12.13

19.4%

0.4%

4.7%

0.9%

0.5 1.0 0.9

-

AT1 High-trigger(DCCP)

-

3

42.2

47.8

1,023

4.7 10.5

42.9

54.3

1,005

1.0 0.9

T2 Low-trigger

T2 High-trigger(DCCP)AT1 High-trigger(DCCP)

CET14.3%

-

0.1%

1.0%

4.1% 4.3%

~3.6%

31.12.121 31.12.13

5.4%

4.7%

31.12.14

-3

Important information related to this presentation Use of adjusted numbersUnless otherwise indicated, “adjusted” results are a non-GAAP financial measure as defined by SEC regulations. Refer to pages 89-90 of the 2014 Annual Report and pages 20-21 of the 4Q14 financial report for an overview of adjusted numbers.

Basel III RWA, Basel III capital and Basel III liquidity ratiosBasel III numbers are based on the BIS Basel III framework, as applicable for Swiss Systemically relevant banks (SRB). Numbers in the presentation are SRB Basel III numbers unless otherwise stated. Our fully applied and phase-in Swiss SRB Basel III and BIS Basel III capital components have the same basis of calculation, except for differences disclosed on page 257 of the 2014 Annual Report.

Basel III risk-weighted assets in the presentation are calculated on the basis of Basel III fully applied unless otherwise stated. Our RWA under BIS Basel III are the same as under Swiss SRB Basel III.

Leverage ratio and leverage ratio denominator in this presentation are calculated on the basis of fully applied Swiss SRB Basel III, unless otherwise stated.

From 1Q13, Basel III requirements apply. All Basel III numbers prior to 1Q13 are on a pro-forma basis. Some of the models applied when calculating pro-forma information required regulatory approval and included estimates (discussed with our primary regulator) of the effect of these new capital charges.

Refer to the “Capital Management” section in the 2014 Annual Report for more information.

Currency translationMonthly income statement items of foreign operations with a functional currency other than Swiss francs are translated with month-end rates into Swiss francs. Refer to “Note 36 Currency translation rates” in the 2014 Annual Report for more information.

RoundingNumbers presented throughout this presentation may not add up precisely to the totals provided in the tables and text. Percentages, percent changes and absolute variances are calculated based on rounded figures displayed in the tables and text and may not precisely reflect the percentages, percent changes and absolute variances that would be derived based on figures that are not rounded.

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